Aon’s Strategy and Technology Group launched just over 12 months ago. Could you describe its key offerings?
STG has been operational in Asia Pacific for just under 12 months, and we have a growing team that is dedicated to serving our regional client base. We have three main focuses; strategy consulting in areas such as market entry and exit, capital strength, and growth – operationally and geographically. Then there is finance and actuarial, which focuses on the IFRS regime, appointed actuary work and deeper financial and capital modelling; and the third pillar is insurance-specific modelling software for pricing reserving, cash-flow projections and capital modelling. Our work generally begins with a client approaching us with a specific business challenge and ends with either a consulting solution or a software solution, or, as often happens, a mix of both!
There are two features that distinguish us from other consultancies: one is our deep domain knowledge, insofar as we only focus on insurance and reinsurance; we’re not generalists. Secondly, it is the vast amount of data we hold at Aon, and how we can turn this data into business enabling information and insights to the benefit our clients.
Another differentiator is that our STG colleagues in Asia Pacific have access not only to the hundreds of colleagues internationally in the wider STG team, but also Aon’s global network of more than 50,000 colleagues.
Which of the solutions are of most relevance to Aon’s Asia Pacific clients?
The hard reinsurance market is causing clients some challenges. When it comes to renewals, both the insurers and the reinsurers will be affected by the dynamics and capacity constraints in some areas. In response, we seeing a drive to more retention, or a drive to better understand profitability and to understand capital management and placement. We have been helping clients to navigate volatility in areas such as the creation of internal reinsurance vehicles, to focus and clarify capital usage.
Inflation continues to be present the system, and as a result we have seen a significant focus on pricing. Our task is to help shape better decisions for our clients through understanding the pricing environment across specific business lines, and advising them on how to address challenges from the perspectives of people, processes, systems and data. Our pricing software, Aon Pricing Platform, is proving of particular interest here.
Where do you see innovation happening in APAC over the next 12 months? Which areas of your Transformative Trends report is most relevant to the Asia Pacific audience?
There is a lot around predictive catastrophe modelling, which involves the rise of artificial intelligence. AI is obviously a fast-evolving sector, and one that presents opportunities, but it also presents challenges. We know how to use AI to address and utilize data better, ask more intelligent questions, and receive faster answers. But we need to think about how to protect our own data and get the best from the models that already exist.
On the modelling side, we’re aiming to be even more predictive. For example, we’re seeing cyclones in Australia and flooding in Malaysia and Hong Kong. We are looking at how insurers can move from being less reactive, to being more predictive, and are helping to provide solutions and insights to assist clients to better prepare for when natural disasters strike.
Playing an active role in the transition away from carbon is another key consideration. In this regard, there are unique challenges in the APAC market, and being a proactive part of the transition journey is something which is key.
Are there emerging operational risks that need to be addressed?
We’re seeing ’50-year events’ happen more and more often, and on the climate side, the risks have already emerged. We're living with that, and the question is how we cope and how we respond and react. The emerging risks are around political risk which affect supply chains and energy transition. We’ve already seen those happening as a result of the Ukraine/Russia war, and now there are problems in the Middle East. Asia has its own potential geopolitical flashpoints that need to be considered as well.
We hear of the need for insurers to evolve their talent pools, so could you describe the talent situation in Asia Pacific?
It’s a tight market and varies from country to country. In China and Hong Kong, the pandemic lockdowns caused a shift and an exit of talent, but we’re now seeing that talent flowing back in. The way insurance operates is also changing so, in addition to talent shortages in some areas, we’re also seeing the need for new skillsets to come to the fore. Globally, the insurance sector needs to further increase its efforts to ensure that people actively select a re/insurance career, and the way we approach that challenge in Asia is as important as anywhere else.